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Hurricane Katrina is the latest evidence that the Army Corps of Engineers should be abolished. It shouldn’t merely be reformed or “privatized.” Its duties shouldn’t be redistributed among other agencies. Just abolished. In its place, if government gets out of the way, will emerge a decentralized industry that will do the sorts of things the Corps does — except that it will do them intelligently because it will be guided by the price and profit-and-loss systems.

All of the Corps’s faults are attributable to its being a government agency. A bogus debate sometimes swirls around government agencies: should they be independent or not? Independent of what? Congress or the president. But neither alternative is good, which is why the debate is not worthwhile. An independent government agency is accountable to no one, yet it lives off the taxpayers and wields power over them. But an agency that is not independent is accountable to politicians, and that’s no advantage over independence. The issue is not independence; the issue is bureaucracy.

As Ludwig von Mises elaborated in his classic, Bureaucracy, government agencies cannot perform like private enterprises because they lack the essential features of market organizations: sovereign consumers, competition (or the potential for competition), and prices for inputs and outputs that communicate vital information about supply and demand. To put it in the briefest form, bureaucracies are accountable either to themselves or to political authorities. Private enterprises are accountable to consumers. This explains the difference between how the government responded to Hurricane Katrina and how Wal-Mart and Home Depot responded. (For a discussion of Mises’s book, see Freedom Daily,January and February 2005.)

The disaster of Katrina has revealed that the Corps is nothing less than a big barrel of pork. As the Washington Post reported,

[More] than any other federal agency, the Corps is controlled by Congress; its $4.7 billion civil works budget consists almost entirely of “earmarks” inserted by individual legislators.

Earmarks are special appropriations favored by particular congressmen so they can look good to their constituents and get reelected. The practice is one of the reasons the reelection rate is so high. It’s part of the incumbent-protection system. Moreover, it is one of the starkest examples of logrolling. Congressman A votes for Congressmen B’s earmark in return for Congressman B’s vote on Congressman A’s own earmark. It’s a cozy relationship that has been going on for generations. It gives the lie to the civics books’ claim that democracy carries out the will of the people. That “the people” would have chosen the monstrosity that emerges from logrolling and related legislative processes defies credibility. In a perverse sort of way, what emerges from a legislature is the result of human action, but not human design. But the human action is performed under incentives forged with money coerced from taxpayers, who are systematically misled and would be virtually powerless to change things even if they discovered what was taking place.

With Congress closely controlling the budget of the Corps, what has been the outcome in recent years? Behold what the Post reported after Katrina wreaked havoc with New Orleans:

[Over] the five years of President Bush’s administration, Louisiana has received far more money for Corps civil works projects than any other state, about $1.9 billion; California was a distant second with less than $1.4 billion, even though its population is more than seven times as large. Much of that Louisiana money was spent to try to keep low-lying New Orleans dry. But hundreds of millions of dollars have gone to unrelated water projects demanded by the state’s congressional delegation and approved by the Corps, often after economic analyses that turned out to be inaccurate.

According to the Post, before Katrina the Corps was engaged in a $748 million project at the point where the Industrial Canal levee was later breached.

But the project had nothing to do with flood control. The Corps was building a huge new lock for the canal, an effort to accommodate steadily increasing barge traffic.

Except that barge traffic on the canal has been steadily decreasing.

The Post’s article pointed out that the Corps’s pork-barrelization has long been faulted. Yet “Louisiana’s representatives have kept bringing home the bacon.” These are the same politicians who have been all over television in high indignation over the treatment of their state by federal officials. That stench from New Orleans is not the flood waters. It’s hypocrisy.

As an example, the Post tells of the deepening of the Port of Iberia, about 130 miles west of New Orleans. After analyzing the proposal the Corps said the $194 million project didn’t pass cost-benefit muster. But the state’s politicians wanted it, so Sen. Mary Landrieu of Louisiana got the Senate to add to an emergency Iraq-war spending bill an order for the Corps to (in the Post’s words) “redo the calculation.” The Post added,

The Corps must determine that the economic benefits of its projects exceed the costs, but marginal projects such as the Port of Iberia deepening — which squeaked by with a 1.03 benefit-cost ratio — are as eligible for funding as the New Orleans levees.

“The Corps also spends tens of millions of dollars a year dredging little-used waterways such as the Mississippi River Gulf Outlet, the Atchafalaya River and the Red River — now known as the J. Bennett Johnston Waterway, in honor of the project’s congressional godfather — for barge traffic that is less than forecast,” the Post reported. That’s how Washington works.Priorities and consequences

In the selection of projects, bear in mind that politicians, unlike businessmen, have no money at risk. Will voters connect the failed levees with the pork-barrel activities of their so-called representatives? Probably not. The connections are too hard to trace for the average voter trying to make a living and provide for his family. According to the theory of “rational ignorance,” when all you have is one vote, you have little incentive to spend much time on candidate research.

It is true that Louisiana politicians ask for more money than they get to protect New Orleans from hurricanes. But it’s clear what their priorities are. Over the years they have opted for flashy projects to benefit big economic interests rather than boring levee upgrades to save poor people from floods. Politicians are usually not reluctant to gamble with the lives of the un-influential. The Post says that when the Bush administration tried to shift money into maintenance, members of Congress buried the proposals.

Proof of the Post’s thesis was soon forthcoming. The respected hurricane experts at Louisiana State University say that, contrary to the Corps’s account, Katrina did not overflow the levees. Rather, the flooding of New Orleans’s poor neighborhoods resulted from faulty design or construction, which led to the breaches. The scientists and engineers reached their conclusion from “complex computer models and stark visual evidence,” the Post reported.

According to Ivor van Heerden, deputy director of LSU’s Hurricane Center, the devastation of New Orleans was caused by a “catastrophic structural failure” and the levees should have had no trouble with Katrina.

The Corps is sticking with its story that the levees were only built to withstand a Category 3 hurricane, and that the Category 4 Katrina overflowed the concrete walls near Lake Pontchartrain and weakened the levees underneath, leading to the breaches.

“But the researchers have strong evidence that Katrina’s subsequent surge from the north was several feet shy of the height that would have been necessary to overtop the 17th Street and London Avenue floodwalls. It was the failures of those floodwalls that emptied the lake into the rest of the city, filling most of New Orleans like a soup bowl,” the Post reported.

Perhaps the designer and contractor will be investigated, but don’t expect any fundamental change. As long as the Corps exists, political meddling and dubious contracts will be the rule. The word “boondoggle” must have been coined specifically for the Corps. But remember, it is ultimately Congress that deserves the blame.

The last thing we should be surprised to learn is that the politicians now want more money for the Corps. The Post reported in late September,

Louisiana’s congressional delegation has requested $40 billion for Army Corps of Engineers projects in the wake of Hurricane Katrina, about 10 times the annual Corps budget for the entire nation, or 16 times the amount the Corps has said it would need to protect New Orleans from a Category 5 hurricane.

In all, the state’s federal politicians are asking for $250 billion in rebuilding money, “more than $50,000 per person in the state.” That does not count the $62.3 billion already passed. In an editorial titled “Louisiana’s Looters,” the Post stated,

Like looters who seize six televisions when their homes have room for only two, the Louisiana legislators are out to grab more federal cash than they could possibly spend usefully.a

Moreover, the bill containing this request would weaken whatever cost-benefit testing has been permitted to date. It’s going to be a wild ride for the taxpayers.

Obviously, the Army Corps of Engineers is not the only problem.

This article originally appeared in the December 2005 edition of Freedom Daily. Subscribe to the print or email version of Freedom Daily.

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Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State.
Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..."
Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics.
A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.

Reading List

Prepared by Richard M. Ebeling

Austrian economics is a distinctive approach to the discipline of economics that analyzes market forces without ever losing sight of the logic of individual human action. Two of the major Austrian economists in the 20th century have been Friedrich A. Hayek, who won the Nobel Prize in Economics, and Ludwig von Mises. Posted below is an Austrian Economics reading list prepared by Richard M. Ebeling, economics professor at Northwood University in Midland and former president of the Foundation for Economic Education and vice president of academic affairs at FFF.